With respected oilman Doug Jendry also seated alongside Smith these days, the company revealed today it had shrugged off another uncertainty after settling the possible exposure to a significant shareholder for a dollar's consideration, preventing further dilution of the stock.

Kalrez late last year settled outstanding claims by a joint venture partner, which had led the company to be in default of its funding agreements for its Indonesian Oseil project for a number of months. Shareholders were not advised the company was in default.

Earlier this week, the company said it had excellent oil shows from the infill drilling program on its wholly-owned Bula field, and would complete another well as an oil producer. It also announced first oil from the Oseil field, currently producing at around 4000 barrels of oil per day. Kalrez has 2.5% of that project.

Yesterday's settlement revolved around the questionable sale into Kalrez in 2000 of a low temperature separator (LTS) originally from Barrow Island, ostensibly to assist the company to win work in Indonesia. It currently remains unutilised.

In addition to shares and cash totalling A$2.2 million, a further 50 million shares could have been issued to the vendor, Petroasia Group, if only even minor parts of the plant had been sold, according to a clause in the sale.

Recently Smith said he did not know the identity of the people behind Petroasia, which controls approximately 5% of the Kalrez stock, following the sale of the LTS into Kalrez. Petroasia is based in Hong Kong.

Smith yesterday said it was a relief to have the LTS issue behind him and be able to concentrate on increasing the production from the Bula field.

He said earlier in an earlier interview the LTS deal should never have been done in the first place, describing it as a 'reckless and expensive exercise for the Kalrez shareholders."

Note: The author has a beneficial interest in Kalrez Energy.